How do I work out what he's entitled to on Mortgage?

rpc

amandarosina wrote: »

thank-you for your reply. We have 50/50 agreement. I can't sell house, I have 2 young children and am restricted to part-time work so am limited on what mortgage I can get.

I just want to make sure he gets what he's entitled to,

Just saw this. If you agreed 50:50, then surely he is 'entitled' to 50%?

and not a penny more, (he cheated and lied)

Pretty much irrelevant in sorting out your finances.

but I'm still unsure as to how to work it out?

Then you should give serious thought to getting a professional to work it out for you. It would not be wise to negociate based on "back-of-the-envelope" sums if you are not confident in your position.

PasturesNew

To keep it simple, it'd be:

If you got £94k from selling it (£100k - £6k)
£10k to you
£36k to mortgage company
£48k sitting on the carpet.
£24k each.

So you'd end up with £34k and ex with £24k.

But then there'd be other costs to pay, e.g. EA costs and solicitor. If you assume the solicitor, EA and VAT would cost £3k to sell it, that's £1.5k each you'd have to pay up, so he needs to "pay his half" now out of his portion of the money.

Therefore, to buy out the ex, you might offer £22.5k.

For you to do that you'd need to raise a mortgage of £58.5k

RAS

I would suggest that you go over to the families and relationships forum.

If the children are with you, the presumption of 50:50 is rarely used.

You do not say whether you are married or if you had anything written when you bought the property? If yes to either it is easier to sort out.

Pointers:

1. If you remain in the house and pay the mortgage, the equity will increase, so you need a legal order in place to cover that.
2. You will not be able to re-mortgage in your sole name, so you need to sort out a tenancy in common (not least because if you die, under a joint tenancy he gets the whole house regardless of how long you have been paying for it on your own). You need a new will as well.
3. There may well be an assumption that you and the children can stay in the property at least until they are old enough to look after themselves for short periods and you can return to work full-time. You then re-mortage and release the equity.

You need a good lawyer for advice, even if you make the arrangements in mediation.

sonastin

As you can see, there are many ways to fairly calculate a "50/50" split. The most important thing is that you reach agreement with him. If you are both too stubborn to negotiate something mutually acceptable, at worst you end up with no house, at best you end up with the courts deciding. Either way, you can lose an awful lot in fees and charges along the way. If he is playing hardball, always bear in mind that refusing that last £k (or whatever he is holding out for) could end up costing you several £ks to lawyers, estate agents, etc.

I realise that sometimes sheer bloodymindedness can mean you'd rather pay a lot of money to a lawyer than a bit of money to the s*d who hurt you but make sure you are thinking clearly when you make that choice!

Strapped

Ju&Mel wrote: »

If the house was £56k, but it has gone up to £94k, it is only fair your 10k % should have gone up too!
£10k is 17.86% of £56k
17.86% of £94k is £16788
£94k - £16788 = £77212
£77212 - £36k (outstanding mortgage) = £41212
£41212 / 2 = £20606 each

That's exactly what I made it.

Mortgaged amount = 46/56 = 82.1% of value of house
Therefore he owns 41% of value of house
Assuming house now worth £94k (I would actually say £100k if that is the valuation amount, but going with OP's estimate) then he owns £38.6k less half the outstanding mortage, = £20.6k.

BUT - as you were together for 10 years then there is also an arguement that he is entitled to half the total value of the house. This is especially the case if you did not formalise the uneven shares when you bought the property ie hold the property as tenants in common rather than joint tennants. I paid the deposit on my and my husband's house (from the proceeds of the sale of my previous property) but by now I would assume that "what's mine is his, etc".

He may well press for the full (£100k - £36k) * 0.5 = £32k. I know I would. Esp if we were joint tennants. So I would negotiate carefully if I were you.

ETA: Has he suggested a figure?

brizza

I agree with Ju&Mel

My position would be that your deposit of £10k equated 17.9% of the house value - that's yours.
The mortgage since then has presumably been paid equally, so the remaining 82.1% will be equally split.

Working on £94k being a fair value, that means you own 59% of the house, your ex owns 41% of the house.

The other thing I'd taken into account is that given you put the deposit into the house, that means you'll have been able to get a better interest mortgage deal on the back of your money (ie as your ex put nothing in, you'd not have been able to buy the house without you committing your money to it and if you had, it'd have been on much worse terms). I'd use that as bargaining to offer lower than the amount due from these calculations.

I'd also bear in mind not only the repairs you've mentioned, but the selling costs that'd come about upon the hypothetical sale of the the property. It's all very well saying it's worth £94k, but if it's going to cost £2-3k to sell it, make sure you take that into account.

And given the current house market, there's no guarantee that the £94k is accurate, so I'd build in an element of buffer there on your calculation.

I'd go for -

Value of property - £100k
Less: Repairs - £6k
Less: Sale costs - £3k

Total value £91k

Less mortgage £36k

Subtotal £55k

His 41% £22.5k


But I'd use that as your absolute top level, and look to offer, what, 2/3rd of that? So offer him £15k and work upwards from there. Your negotiating factors being a) your deposit giving you the ability to buy in the first place, b) significant uncertainty as to an accurate valuation in this market c) good, old fashioned guilt-tripping.


Another way to make sense if it in your head might be to consider the fact between you, you've paid off £10k of the capital on the mortgage. So he's contributed £5k of that. Looks like whatever he's going to get is still a pretty tidy 10 year return on a £5k investment.

agrinnall

brizza wrote: »

Another way to make sense if it in your head might be to consider the fact between you, you've paid off £10k of the capital on the mortgage. So he's contributed £5k of that. Looks like whatever he's going to get is still a pretty tidy 10 year return on a £5k investment.

It's not really a £5K investment though is it? The £10K that has been paid off the mortgage will have been a small part of the total repayments made over the 10 years, with the bulk of the money going on interest in the early part of a mortgage. I wouldn't be surprised to find that £40K had been repaid to get that £10K reduction in the outstanding amount, which means the ex has invested £20K, making his return on any of the calculations pretty meagre. I think you are right to suggest that the OP should offer low to start with but it's not really fair to suggest the ex will be making a big profit on it.

amandarosina

rpc wrote: »

Why take off the £10k deposit? You swapped cash for equity so the 10k is neither here nor there.


Why take off the 10 grand?? Because it was mine!! And it enabled us to buy this house, we were at the total limit on what we could get a mortgage for so without it, we wouldn't have this. It was my solicitor that advised me to claim this money back, it came from the sale of my previous property and my solicitor said if I have the documents to prove the property was bought and sold in my name then I can use this to my advantage, and why shouldn't I? I'm trying desperately to keep a roof over mine and my childrens heads.

He refuses to get a solicitor (to save money) he's took the car, took all our camping equipment (worth hundreds), loads of stuff out of garage, all bought while we were together and I've not said a thing, even though I think his 'taking what he wants' is very low.

He tells me he can't get a couple of grand together in a year to pay off a loan we have together - then goes and buys a new people carrier, therefore, even if he is entitled to x amount of money - I want to make sure I get my workings out totally correct, he still has an obligation to provide a roof for the kids.

Thanks so much for the pointers Brizza, I really like your ideas and will keep them in mind

Sensible_Jess

OP - were you and your ex married?

This will make a difference to the split and entitlements to both of you.

Cissi

amandarosina wrote: »

rpc wrote: »

Why take off the 10 grand?? Because it was mine!!

I think you've misunderstood rpc - like Ju&Mel they are suggesting that your £10k has grown, hence why you may be entitled to more than 50% of the equity. So don't take it off from the start - consider it instead as 17.8% of the initial equity - this will work out better for you! It means that you would now own 58.9% of the equity in the house and your ex 41.1%. Based on the sales figure of £94k, this brings the figure that your ex would be entitled to to £23.8k (41.1% of 94-36). The big question is going to be whether he agrees to this way of looking at things or whether he'll stubbornly insist on a 50/50 split, in which case it may end up a lose-lose situation with both of you spending a fortune on legal fees.

Given that you're living in the house with his children, I'd try to appeal to him as a Dad, as surely he'll want what's best for his children?!? I'm not saying he really does as other things often take overhand in these situations (revenge, greed...) - but even if not he may prefer for the world to see him as a responsible Dad So try to negotiate with him on that basis. Tell him that if he insists on 50% then the house will have to be sold, and then where will the children and you go?

Also, tell him that there is no guarantee that it would go for anything like £94k in today's climate. Just for the sake of argument: imagine that it only goes for £87k - not impossible, as that's just over 7% off the EA valuation - and then count £3k in fees, bringing you to £84k. With a 50/50 split of the equity you'd be looking at £24k each - he is no better off than if he'd accepted £24k to start with, but his children and their mother are way worse off.

I think you should do some research on the local housing market and try to find out what would REALLY be a realistic price for the house. Don't look at asking prices but check sold prices in the area.